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Google adds CPA and ROAS bidding tools to AdWords

Google has announced two new bidding tools for AdWords advertisers interested in automated Cost Per Acquisition (CPA) or Return on Ad Spend (ROAS) bidding.

Target opt-in recommendations is intended, as the name implies, for advertisers uncertain as to what CPA or ROAS to apply to campaigns. Recommendations are based on actual CPA or ROAS results for the selected campaigns over the previous 2–3 weeks.

Enter your target CPA and the new Target CPA Simulator estimates the impact on conversions (assuming no budget restrictions) using performance data from the prior seven days.

As shown above, Google’s Target CPA Simulator estimates that increasing the target CPA from $9.00 to $11.30 will require $3,658 more in ad spend over the coming week, but produce 281 more conversions.

When you choose CPA or ROAS bidding, Google automatically adjust bids using real-time details like device, browser, location, and time of day. Bids will also be adjusted depending on whether or not the user is in one of your remarketing lists.

Why should you care?

By all means use target opt-in recommendations to set a target CPA or ROAS if you must. However, we’d hope most advertisers will know what an acceptable CPA or ROAS is for their business and use those numbers, rather than a number based on past AdWords performance. If you have a flexible budget and are willing to raise your CPA target (or lower your ROAS), then the Target CPA Simulator should prove a boon in projecting the likely gains (and additional spend required) as you vary your goals.

Not all campaigns will be eligible for CPA or ROAS bidding, however. They must have had at least 15 conversions in the last 30 days, with at least 30 days of consistent conversion performance.

Jeremy and Mark are two of the partners behind SureFire Search. Despite their deceptively youthful appearances, both have worked in search marketing for many years. To put that in context, Google didn't even exist when Jeremy started.